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Wednesday, February 24, 2016

McDonald’s is known in every nook and corner of the
World for offering hot, tasty hamburgers to the masses.
Being masters of the “Dollar Menu”, they own the fast
food industry by providing their food at a significant value.
Then why are we discussing the brand under this section
of the magazine today? Any guesses? When a brand fails
to recognize the need of the hour, it begins facing some
conventional marketing problems, which also happened
with McDonald’s when it launched its new burger, Arch
Deluxe, which failed to inspire consumers.

In 1996, the Arch Deluxe debuted as a large hamburger
patty on a soft potato-flour roll, with lettuce, tomato and
a fancy mustard/mayo combo sauce. Marketed as the
‘Burger with the Grown-up Taste’, the idea was to have
a burger which would shift the
focus away from children. Indeed,
the advertising campaign
for the Arch Deluxe sent across
the message of a sophisticated
alternative of McDonald’s regular
offerings with images of kids shying
away from the ‘sophisticated’
product.
With a $100 million advertising
budget, the burger became successful
in creating a huge build-up to the release. However,
it never caught on with McDonald’s throngs of hungry
fans. Reason sighted against the same were many.
Some argued that it was overpriced. Others believed that
the target market was inappropriately identified. Many
people also speculated that the budget was misused and
the burger in itself didn’t taste that great.

Let’s try to understand
what actually happened. The value propositions
that McDonald’s has set for itself are friendliness, cleanliness,
consistency and convenience, which fortunately its
competitors have neglected to capture. The first consideration
is that a regular customer never goes to McDonald’s
for sophistication, rather goes for the convenience
offered. On entering a McDonald’s restaurant, a customer
gets the convenience of knowing what to expect. He does
not want to be bombarded with a million and one different
variations of essentially the same product- a hamburger.
McDonald’s has never competed on taste, yet everybody
comes back. Another trouble with Arch Deluxe was
regarding the strategy of the burger to be sold on taste.
This may have been the wrong approach to draw in consumers
because it was seen as McDonald’s trying to be
something it’s not: a culinary luxury that appeals to food
connoisseurs. That may not have been the intent, but that
became the perception that led to a major break down.
Another ironical aspect of the Arch Deluxe failure is that
the product was well researched. It was only after an extensive
market research involving different demographic
segments, it was concluded that people would love to
eat a hamburger specially designed for adults. However,
the target market that was supposed to be catered never
turned up, thus proving Arch Deluxe to be an embarrassing
flop.
Last but not the least, McDonald’s is heavily centralized.
Most of the marketing decisions need to pass through the
company’s headquarters in Oak Brook, Illinois. In contrast
to major product successes such as the Big Mac, the Hot
Apple Pie, the Egg McMuffin and the Filet o’ Fish, which
were all invented in operators’ kitchens out in the field,
the recipe for Arch Deluxe
came from the Oak
Brook’s kitchen which is
infamous for launching
many such product failures. Have a look at one of the TVC's of the Arch Deluxe: https://www.youtube.com/watch?v=wE4JrM8OFts

However, the problems
encountered with the
Arch Deluxe are symptomatic
of an even bigger
problem. McDonald’s in
the recent years has been accused of losing connect with
the customers who never find it difficult to give up loyalty
and hence has been rendered far behind in the market in
terms of brand value. Indeed, this is a problem acknowledged
by the company’s CEO, Jack Greenberg, who arrived
in 1998. Quoting Jack, ‘we have been taking much
too long to develop an idea and get it to the market, then
too long to decide whether we want to do it or not’.

Finally let us look at the lessons we have learnt from the
failure of Arch Deluxe: 1. Go for what you know: Part of McDonald’s brand identity
lies in its simplicity. Another part is defined by its children-friendly
approach. A ‘sophisticated’ burger ignoring
children was therefore destined to misfire. 2. Avoid customer confusion: McDonald’s is not cognitive,
it is reflexive. By extending its range with products such
as the Arch Deluxe, Bratwursts, McTacos and McMussels,
McDonald’s was creating a need for its customers to think
and get confused. 3. Be sceptical of research: Market research holds a special
place when carefully conducted, but it should never
be taken as gospel truth. Perception of the brand/product
should always be taken care of, even if the research shows
results in the opposite direction.

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Launched in April 2009, Markathon is the monthly Marketing magazine released by the Marketing Club of IIM Shillong and was the brainchild of Asit Jain, Saurav Bagchi, Dilpreet Singh, Ritul Singh, Pranab Talukdar & Soumyasanta Roy. The current office bearers are Ashok A, Kamalpreet Saluja, Pallavi, Prateek Gaurav, Shashank Singh Tomar, Sushree Tripathy, Swikruti Panda and Vaibhav Annam. This is the first monthly B-School marketing magazine which is circulated in over 50 B-Schools in India and abroad and has a reader base of over 5000. Made available in a free-to-distribute electronic format, it includes articles which cover a plethora of marketing topics and also has an ad designing competition. Markathon aims to deconstruct marketing jargons to make the subject more accessible to students. Interviews of corporate and academic stalwarts is a regular feature. The issues are characterized by rich images, detailed styling and the cover pages are especially remarkable and lend identity to the whole issue.